DOWNERS GROVE, ILL. — Pricing and cost-cutting initiatives helped Sara Lee Corp. weather the sharp rise in raw material costs that have affected the earnings of other food processors. For the second quarter of fiscal 2008, ended Dec. 29, the company had net income of $182 million, equal to 25c per share on the common stock. The results compare favorably to the loss of $62 million the company had last year. Sales for the second quarter of fiscal 2008 were $3,491 million, which compared with $3,182 million for fiscal 2007.
"During the second quarter, we benefited from our ongoing investment in the company as sales growth continued across all business segments and we gained share for many of our largest brands," said Brenda C. Barnes, chairman and chief executive officer. "Our strategic approach to pricing, combined with the impact of procurement and continuous improvement savings, helped offset significantly increased input costs. In addition, the higher advertising and promotion spending that supported more than 40 new products launched this quarter helped us strengthen our position as a marketplace leader."
On a business segment basis, Sara Lee’s International Beverage business had a strong quarter, as operating income increased to $125 million compared with a loss of $10 million for the same period during fiscal 2007. Sales for the quarter increased 22% to $821 million. The increase was fueled by favorable foreign currency exchange rates, a positive sales mix and price increases taken to cover higher commodity costs, according to the company.
Sara Lee’s North American Retail Meats business had an operating income of $50 million on sales of $658 million. The operating income increase compared with a loss of $6 million during the second quarter of fiscal 2007. Improved segment results in Mexico were cited as a reason for the improvement.
The North American Retail Bakery business, which includes Sara Lee’s Senseo coffee results, had an operating income of $7 million during 2008, which was an increase over the $3 million the previous year. Sales for the quarter were $547 million, an increase of 9% over the second quarter of fiscal 2007.
Other business segments, including Foodservice, International Bakery and Household and Body Care also reported improved results for the quarter.
For the first half of fiscal 2008, Sara Lee had net income of $382 million, an increase from $271 million for the previous quarter. Sales were $6,622 million, which compared with $6,073 million.
The company noted that it expects is full year earnings per share guidance to be in the range of $1.03 to $1.09 per share. The guidance includes 18c per share of contingent proceeds received during the first quarter of fiscal 2008 from the sale of Sara Lee’s tobacco business in fiscal 1999.